Jeffrey Carr from NYU Stern’s Berkley Center for Entrepreneurship talks about the need for mentors in the New York startup scene
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they bring the money and the advice.”
According to Cohen, the perception of plentiful cash in the local market entices would-be entrepreneurs to seek investors. “It used to be ‘will I get funded?’ and now the sense is ‘when I get funded,’” he says. To help curb some of that overheated enthusiasm, Cohen says New York Angels is creating what he calls the New York City Devil’s Advocacy Council to bring together young companies with veterans of the business world for candid conversations. “It’s really to send a message that we want to be smarter and tougher for everyone and to facilitate their success in a way that gets them where they want to be sooner,” he says.
Such conversations may lead to blunt reality checks for entrepreneurs who need to reconsider their plans, he says. “Here’s a dime, call your mother, tell her you’re going to pivot,” Cohen says. He elaborates that a primary reason why startups fail is they often do not address evident problems such as replacing a bad salesperson or, worse yet, dealing with a troublesome partner in the business. “You don’t deal with the things that are definitely going to destroy you because you don’t want to and you’re scared to,” he says.
Cohen says it’s hard to find fresh business ideas amid the flood of startups these days. In 2010, the New York Angels saw 250 applications from companies seeking funding. As of September 2011, some 450 companies have applied for funding with the group. Cohen says since its inception in 1997, the members of New York Angels have collected invested about $40 million in some 70 companies.
Carr says good ideas do still exist in the market, though some may be repetitious or just too early in development to pursue funding. He says entrepreneurs who are serious about building companies will consider a pivot if necessary after listening to feedback from the investor community.
“You see more people who aren’t ready,” Carr says. “They shouldn’t be talking to angels, sending in applications, and wasting everybody’s time doing pitches when they are nowhere close to that.”